"credit is far too easily available in the uk" (griffiths Commission on Personal debt)

Research Company 'Data-Monitor' has said that the average briton owes £4000 approximately in unsecured debt. britain has an insatiable lust with credit cards and is one of the highest users in europe and had a credit card debt of £55.9 billion by september 2005. In March 2006, the bbc news declared that uk Personal debt was at a dangerously high level and was in fact a "time bomb waiting to go off."

Young people (between 18-29 years old) are the largest group in debt and this has doubled over the last three years. In 2002, less than 6% of the Consumer Credit Counselling Services' clients were under 25 years old but this rose to almost 13% in 2005.

"bankruptcy figures are soaring and this may be accounted for by the young who are without assets and who have overspent on credit cards and personal loans." (malcolm hurlston cccs Chairman talking to bbc news, september 2005)

This love affair with the credit card is hardly surpising in the uk. The media fascination with celebrity; advertising; and the constant need to 'keep up with the Jones's' have helped people to aspire to own more and appear to have more than they can afford. In addition, it is in the best interests of credit card card companies to encourage people to overspend and run up debts - this is how they make money, as they are able to charge interest on top of the amount owed.

The growth in the number of credit cards issued has begun to slow significantly in the last year whilst the number of debit cards has shown an increase. It has been argued that this is because people are beginning to realise that it is better to spend the money that is in their account rather than living on 'borrowed time' through credit cards. It is also argued that people are starting to change their spending habits and now prefer to use their credit cards for smaller purchases that they can afford to pay off rather than 'big spends' such as holidays, which clock up big balances on the cards and become unaffordable.

nevertheless, this does not hide the fact that there are still thousands of people facing enormous credit card bills that they cannot afford to pay. If you are facing huge debts that you have run up on your credit card, just remember, you are not alone and there are companies who can help you negotiate more affordable payments with your credit card companies. Finance Inc offers a free and impartial financial advice service for people with credit card problems. so, if you feel that you can no longer face the burden of your debt alone, please chat online to one of our advisors, or call 0845 833 6948.

LESSON LEARNT #1: Keep within your spending limits!

A lot of people do not feel comfortable with their credit card because they think they might accumulate debt they cannot afford to pay back, or because they feel they could ultimately lose control of their finances. therefore, a key lesson to learn when spending on credit cards is to keep purchases within affordable levels (i.e. those that can be paid off on a monthly basis). It is tempting to want to purchase something that is slightly beyond our spending limit. however, it is important to remember that small payments on credit cards will result in large interest charges. This could eventually mean that repayments made make little difference to the monthly bill.

LESSON LEARNT # 2: Avoid the temptation of the Store card!

Store cards - the ticket to luxourious spends that would usually be unimaginable on income alone due to other commitments such as bills, food and travel expenses. however, with the store card you need not deliberate over whether you can really afford that 'little black dress' as this eliminates all worry - temporarily. It is important to bear in mind that store cards take you back to living on 'borrowed time' and are in fact worse than credit cards due to the large interest charges incurred. In 2004, total store card debt in the uk amounted to a massive £3.15 billion!

If you do not pay the outstanding balance at the end of each month, the interest owed can soon add up and lead to a huge store card debt. And with interest rates on store cards averaging 30% apr - the debt can soon become unmanageable and stressful, making that initial need for luxury regrettable.

If you feel that you have store card debts that have become a burden and you are o longer able to comfortably meet the repayments to reduce the debt, there is help available. Finance Inc offeres a free and impartial advice service to help people sort out their store card debt. simply, chat online to one of our debt advisors, fill in an application form or call 0845 833 6948 to talk to one of our debt advisors direct.

LESSON LEARNT #3: Don't ignore the default notices!

This is not a scare tactic used by credit card companies and does not mean that you will be taken to court immediately. A default notice is the credit card Company's way of informing you that there have been irregular repayments on your credit card, or that you have not made a payment for some time. nonetheless, it is crucial that you do not ignore the default notice or 'file it' away in the rubbish bin. Failure to make contact with the credit card Company once you have received a default notice could eventually result in legal action.

The first step is to work out what you can reasonably afford to pay the company and contact them by phone and letter to make a proposal. The company may well refuse your offer but you should make a payment anyway to show willing and an attempt to clear the debt. If it is clear that you cannot afford to make the payments needed to bring your account into a healthier state you should seek debt advice. Finance Inc offers free consultation to people in this situation. Simply call 0845 833 6948 to talk to an advisor, or you can chat online by visiting www.finance-inc.co.uk. Our debt advisors are able to negotiate an acceptable repayment scheme with creditors and prevent any further action.

LESSON LEARNT #4: Debt Consolidation loans are not always the right solution!

When credit card or store card debts have become too much, debt consolidation loans are often one of the first solutions people think of. This is no surprise as television, radio and the papers are plagued with adverts from loan companies promising an easier life, no hassle and no fuss on the condition that you re-mortgage your house and effectively hand the deeds over to them in case you cannot afford to pay it back! ultimately, debt consolidation loans can cause more problems than they solve.

why?

1. The overall cost of this type of loan is usually very high

2. Your home is at risk of possession by the company if repayments are not kept

3. You have no control over repayments if the interest rates increase

If you are suffering from debt problems caused by credit or store cards, it is important to consider what options are most appropriate relative to the amount you owe.

The table below shows different levels of unsecured debt and the best solutions available for each level.

Level of Debt	Best Solution (s)
>£1000	A consolidation loan is appropriate because the debt is more affordable and it is more likely that this can be easily paid back with interest. however, you could also consider debt management or bankruptcy (if suffering from deprivation and therefore unable to make any payments or qualify for a secured loan)
Between £1000 and £15,000	Again a consolidation loan is ok but it would be more advisable to join a debt management programme if the debt is closer to £15,000. Debt advisors at Finance Inc would be able to provide more information on how to do this - simply chat online to an advisor or call 0845 833 6948 today

Level of Debt	Best Solution (s)
£15,000 +	Although a debt management programme would be suitable, the best solution for you is an Individual Voluntary Arrangement or iva. You could also consider a re-mortgage but this is not really advisable, as this could result in losing your home. With an iva you will keep the roof over your head. Finance Inc can provide sound advice on ivas for people who have more than £15,000 debt. Call 0845 833 6948 or chat online with one of our debt advisors to discuss this option in more detail.
£25,000 +	again, an iva is the best solution for you at this stage. Other alternatives include debt management or bankruptcy, though the latter could result in loss of your home

CHANGE IN CIRCUMSTANCES

Recent research has found that as well as overspending on credit and store cards, a change in circumstances is one of the main causes of serious debt problems. Sudden redundancy, or the death of a loved one can make it very difficult to continue to meet previous financial commitments and can lead to debt problems. This sudden strain can be diffucul to deal with alone and this is amplified by the fact that the person or family is already facing turmoil and stress as a direct result of the change in circumstance.

It is impossible to know when a sudden change in circumstance can occur and in the meantime people will always borrow a little to live a little. however, Finance Inc recognises that, should a change of circumstance arise, an individual or family should not be left to deal with the fallout caused as a result. By calling 0845 833 6948, our debt advisors will offer empathatic and impartial advice in how to deal with any resultant financial problems.

During 2005, the Department of Trade and Industry reported that britain had reached record levels of bankruptcy with almost 70,000 people becoming insolvent. Experts say that this increase is due to greater personal debt accumulated through credit cards and loans.

Those who do not file for bankruptcy instead opt for Individual Voluntary Arrangements (iva) which is an alternative allowing debtors to come to an agreement with creditors.

The Department for Constitutional Affairs also reported that repossessions have seen a similar increase and had been demonstrating this upward turn since early 2004. These figures add to concerns about british debt and the housing market. Accounting and consultancy firm kpmg suggest that these increases are an effect of the credit boom of recent years. Because credit has become more easily available, more people incur debt and therefore, it is inevitable that more people will eventually become bankrupt.

Some feel that recent changes to bankruptcy laws have made it easier for people to choose this option, as the time limit for discharge has been reduced from three years to one. however, others suggest that the availability of credit, unemployment and life changing circumstances (such as divorce, or the sudden death of a partner) can contribute to insolvency.

If you feel that bankruptcy or an Individual Voluntary Arrangement are options that you would like to consider you must seek debt advice before deciding on this option. For advice on ivas and bankruptcy call Finance Inc today on 0845 833 6948. Our debt advisors will be able to discuss this option and the implications with you more thoroughly and make contact with your creditors should you decide this is the best course of action for you.

Remember that, whatever your circumstance, Finance Inc offers a free and impartial debt advice service to people from all over the uk and will try to help you find the best solution for you.

Debt advisors at Finance Inc will work with you to find out which debt solution would work best for your situation and will help you to set this up without any obligation.

Whether you prefer to chat online of call 0845 833 6948, one of our experienced staff will be happy to discuss a number of financial solutions for you or simply answer any questions you may have about your debt.